Being a stockholder (one of many in our economy), I worked pretty damn hard for the money I earned. Instead of splurging that money on leisure or stuffing the cash in my mattress, I invested that money in other companies. Those companies are using my money to conduct their business.

Now, some of the companies I invest in are startup ventures - i.e. I am an original stockholder. These usually represent the highest risks. In a well balanced portfolio, I also invest in some "safe" stocks as well, where the risk is much lower, but so are the rewards.

In response to CRC, it don't make a damn fuckin bit of difference that I was not the one that supplied the original seed money. Any accrual in stock value that took place between the initial offering and the current market value of the stock is profit to the original holder of the stock. But by investing in the stock, I am assuming the original terms of the loan. As such, I become a primary stockholder with rights equivalent to supplying the cash directly to the company. The company is, in effect, still using my money. If it were not for the liquidity implicit within stocks - ie the ability to sell them when it serves my needs - then a lot of people wouldn't have put their money into stocks in the first place.

This is not to say that business should be totally unregulated, nor that labor should not attempt to organize. But the idea that stockholders do not do the work is misplaced. Look at any company who's stock became worthless, and you'll find that a lot of people - both inside and outside the company lost a lot of money. The employees may have to go out and find a new job but they did not lose money that represents past labor - unless, of course, they were stockholders.

...yet many of them went belly up. For each person that was in it as a scam, I would assume that there were many others that really thought they had a chance for success. Hindsight is 20-20, and based on current economic conditions, we know that only a few of them really ever had a chance of survival.

Actually the dot com bust is not particularly unique when it comes to new markets that open up. Simulataneously, state deregulation of power, telecommunications, and biotechnology resulted in a 'gold rush' of the same sorts - you could also look for parallels in the development of radio and tv companies earlier in the 20th century. Whenever a new line of business opens up, there is invariably an influx of money, capital and labor. In almost every situation, these are (a) extremely risky; (b) prone to scams; and (c) beneficial to the health of the economy in the long term (although the short term results can approach catastrophe).

Any individual whose primary objective is "job security" should steer clear of new markets. Even if the individuals involved are honest, the chance of failure is still very high - not all businesses fail simply because management and stockholders were greedy. Starting a business as an entrepreneur is an extremely difficult proposition. Finding people to doubt your sanity is very easy.

If you have a business plan that simply can't be executed without outside/venture capital, you pursue it.

Most startups have an extremely difficult time doing simple things like meeting payrolls, attracting talented people, paying vendors, etc. Without an influx of venture capital, many of them are doomed to failure. Since the investors are assuming some of the risk, it is obvious that they should share in the rewards.

Having seen many startups up close, one danger that the entrepreneur faces is that they end up giving too much away in order to get the needed funding. I've seen situations where the investors ended up owning everything, when all was said and done. I'm also working for a startup at the current time that has tried to resist outside investment, hoping to hold to 100% ownership - but the allure of getting some funding is a very strong attraction.

But if attracting outside investment is the point of the business you don't have what I would consider a valid business plan.

What you are describing is not so much a business as a scam. If it is a business, it is based on the model of making money by bilking investors, rather than setting up a business to supply goods and services to other businesses or consumers. These sorts of businesses will inevitably fail as they are based on unsound principles of making money.

The preference for blaming these things on fraud, though, misses another aspect - that of the culpability of the employees. I notice that there were not a lot of software developers that were complaining that these companies paying them too much money - offering to work for less money. Software developers were willing to change jobs at the drop of a hat and charge well over six figures for work that was, in hindsight, based on a fraudalent pyramid structure. Had these employees resisted the urge for short term megabucks, it's possible that not nearly as many companies would have bombed - thus increasing the total number of jobs in the economy over the long haul - which you consider the primary goal of business.

So I'm back to my original point: The main purpose or a business is, or should be, to provide a living for its employees.

That's quite a stretch. First you outline that business should be predicated on sound principles for making money over the long haul. Although I agree with that assessment, what you seem to really be implying is that only those markets which are not risky should be explored. The problem with low risk ventures is that they are generally few and far between or they are commodity markets. Yes, business must try to minimize risk as much as possible, but the system is based exactly upon the idea of taking risks - that's how new jobs are created in our economy.

Even allowing that owners of business should put in place a viable business plan, the plan is still geared towards making the owners money - you've just shifted the time frame involved - from short-term to long-term. The ownership still has a vested interest in making money over the long haul. If no money is made, or if it is a money losing proposition, then the company will sooner or later become unviable.

Or to analyze the [link|http://www.eagletribune.com/news/stories/20001210/FP_004.htm|Polar Fleece] example you cite:

"His company is a family business, and therefore, he can do pretty much what he thinks is the right thing to do," said Frank Leary, a professor of business administration at Northern Essex Community College. Publicly held companies have stockholders to answer to. And stockholders care about profits.

Implicit within this statement is that a family business is somehow more ethical than a corporation. Having worked for some family businesses over the years, I'd say that they are, on average, no more benevolent - with exceptions leaning both ways.

That said, this is a nice bit of public relations that was pulled off. Somehow, this owner has the media and employees believing that he has no interest in 'profit' - that's only something that stockholders care about.

"He looks at it from a long-term investment point of view," Mr. Leary said. "He knows he has highly motivated, highly trained people that are available, and if he moves, it will take him time to get up to speed, to hire, train, motivate and assure quality control. His advantage is that he produces a high-quality product and has great confidence in the expertise of his workers. He thinks that his workers are an asset of the same value that capital equipment would be."

So, what he really wants is to do is hold on the current employees as assets, so he doesn't risk his company in some foreign country that doesn't have skilled labor. In other words, in his valuation for making money, he thinks that the extra productivity of his current skilled workers may will outweigh the costs to shifting from a cheap - but unskilled - labor force.

Yes, the evidence seems to indicate that the owner made a sound economic decision - a decision that resulted in saving many "American" jobs. But the purpose of this businessman was not simply 'to provide a living for its employees', it was to make money. He should be commended for making a decision which will result in profit, based on a long term strategy. I wish that more businesses would get out of the quarterly time frame.

Anyhow, Polar Fleece is simply one example of how profits and treating employees like assets need not be mutually exclusive.

Consider Michael Douglas' speech in Wall Street where he basically lays out the capitalist owners' mantra: I don't produce things, I own them. He is willing to break up a company and sell it off, putting people out of work, as long as it makes him money. Is the purpose of a company really supposed to be that it gets shut down?

Wall Street was an unbalanced treatment of the subject, and although it is told mostly from the perspective of the investors, it is intentionally scripted in a biased fashion aimed at provoking a reaction against those same players.

A far better movie on the subject was 'Other People's Money' where the issues were presented much more clearer. Even though Gregory Peck is presented as a man of character interested in the employees and Danny Devito as a raiding scumbag, the argument they have in their final speeches cuts through all the crap and exposes it in a much better fashion than Wall Street.

Does the company exist so that you may invest in it? I propose that the company exists so that its employees may earn a living. The capitalist system has proven to be the most efficient at attracting resources to a given endeavor, but has caused people to believe -- incorrectly IMO -- that serving the investors is the primary purpose of that endeavor.

By definition, a capitalist system is based on the very foundation of ownership of factories. The ownership of that capital entitles the ownership to do with it what it wants. Employees have four options if they don't like the way a company treats them: (1) find employment elsewhere; (2) have or develop skills which increase your potential to generate profit for the company beyond which other such employees can attain; (3) live with it; or (4) organize a collective bargaining unit. Even in the case of Unions, collective bargaining does not bestow ownership of capital to the labor class - unless, of course, they arrange some sort of employee stock options.

If a company is breaking even and its employees are getting paid, I don't think it should be broken up just because it makes the owners more money that way. I don't think a CEO should cut a company's workforce by 30%, saving $16-million and driving the stock price up by 3 points in the process, only to be rewarded by the board with a $16-million bonus.

Well, in the case you cite, the market is saying that this company should be smaller - remember that the market says things by assigning a monetary value to actions - an opportunity cost per se. As the movie I cite above talks about, you want to use my money to keep people on the payroll - essentially robbing me of the freedom to invest in other companies that may, just may, be more efficient and viable in the long term.

More fundamentally, the problem with your analysis is that it is wishful thinking, when not accompanied by some economic motivation. Companies are owned by stockholders - it's a capitalist system where the investors, not labor, own the means of production. Just because we think that the system should care about their employees does not make it so. As I've stated several times, business (by which I mean the owners of business) are in this to make money. They are not in it just to perform some social good, especially if it effects their bottom line.

As for my own perspective, I would probably agree that a business should care about their employees - especially if I'm the employee involved. The difference is that I think it a self-delusion to think that business operates for any other purpose than to make money - be it for the sake of the stockholders, management, or employees. Since this is a capitalist system, employees are on the low end of the totem pole. And upper management, which are usually coaxed with stock options, is invariably going to side with the stockholders.

Any example of how abhorrent management can be in their treatment of employees is quite simply nothing more than proving my point - money is what talks.